This 1st Business Services Title Could Beat Profits: Why It Should Be On Your Radar – October 4, 2021
Two factors often determine long-term stock prices: earnings and interest rates. Investors can’t control the latter, but they can focus on a company’s results each quarter.
We know earnings results are vital, but a company’s performance against earnings expectations can be even more important when it comes to stock prices, especially in the short term. This means that investors might want to take advantage of these earnings surprises.
Hunting for “profit whispers” or companies willing to beat their quarterly profit estimates is a fairly common practice. But that doesn’t make it any easier. One proven way is to use the Zacks Earnings ESP tool.
Zacks Earnings ESP Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find surprise earnings by focusing on the most recent analyst revisions. The rule of thumb is that if an analyst re-evaluates their earnings estimate before the earnings release, it means they likely have new information that could be more accurate.
With that in mind, the expected surprise prediction compares the most accurate estimate (being the most recent) to the overall Zacks consensus estimate. The percentage difference provides the ESP figure. The system also uses our Zacks Rank base to provide a more robust system for identifying stocks that could beat their next quarterly profit estimate and possibly see the stock price rise.
When we join a positive earnings ESP with a Zacks Rank # 3 (Hold) or higher, stocks showed a positive surprise 70% of the time. Additionally, this system has allowed investors to produce around 28% annual returns on average, according to our 10-year backtest.
Most stocks, around 60%, are in Category # 3 (hold) and are expected to perform in line with the broader market. Stocks with a # 2 (Buy) and # 1 (Strong buy) rating, or the highest 15% and 5% of stocks respectively, are expected to outperform the market, with strong buy stocks outperforming more than anything. other classification.
Should You Consider Cross Country Health Care?
The last step today is to look for an action that meets our ESP qualifications. Cross Country Health Care (CCRN – Free Report) gets a # 2 (Buy) 30 days from the next release of its quarterly results on November 3, 2021, and its most accurate estimate is $ 0.39 per share.
The CCRN has an ESP figure of 12.72%, which, as explained above, is calculated by taking the percentage difference between the most accurate estimate of $ 0.39 and the Zacks consensus estimate of 0. , $ 35. Cross Country Healthcare is one of the only large equity databases with positive PSEs. These actions can be filtered by ESP, Zacks Rank, Surprise% (Last Quarter), and Report Date.
Now that you know how to use Zacks’ Earnings ESP to your advantage, be sure to check out the Earnings ESP homepage for even more winning strategies to build a winning portfolio.
Find stocks to buy or sell before they are reported
Use Zacks’ ESP Profit Filter to bring up stocks with the highest probability of buying or selling positively or negatively before they are reported for profitable trades during earnings season. Find out here >>